Reducing vulnerabilities

Growth in developing East Asia Pacific (EAP) has remained broadly stable in the past 6 months. It is expected to decline gradually during 2016-18, driven entirely by the ongoing slowdown in China, partly offset by a pick-up in the large ASEAN economies. This outlook is subject to elevated risks, and it is critical to address underlying vulnerabilities. China should continue measures to bring the growth in debt under control. Among other large economies, risk can be reduced through enhanced micro- and macroprudential policies. Across EAP, maintaining fiscal buffers is a priority; in Mongolia, Timor-Leste, and to a lesser degree Vietnam, substantial consolidation is needed. Over the longer term, China should maintain its commitment to rebalancing toward consumption-led growth. Across the rest of EAP, enhanced expenditure on infrastructure must be accompanied by measures to improve its efficiency. Boosting inclusion will require a focus on reducing undernutrition, harnessing technology to transform financial services, and exploiting innovations in social protection to reduce vulnerability to shocks. The East Asia Pacific Economic Update provides biannual analyses of development trends and economic policy issues across the East Asia and Pacific region